Understand how trading conditions and insurance can limit the financial risk for freight forwarders
Overview of freight forwarders’ responsibilities
Freight forwarders provide transport solutions to businesses wishing to send packages, crates and containers from one country to another.
Forwarders act on behalf of importers and exporters to get their client’s goods to their destination on time and in good condition. This means booking cargo with shipping lines, airlines, rail or road carriers. Some freight forwarders have their own road transport and may actually carry the goods themselves.
A forwarder’s other responsibilities include preparing and checking bills of carriage, arranging insurance, ensuring the lowest possible customs charges are levied and – where necessary – arranging storage.
This guide shows how trading conditions and insurance are used to limit the financial risk for forwarders. It also explains international trade finance and International Commercial Terms.
Trading conditions and limiting liability for freight forwarders
All businesses are subject to a wide range of statutory regulations – such as employment law, health and safety, public liability and accounting standards. There are also legal issues which specifically affect freight forwarders and their customers.
The role of the freight forwarder is to make arrangements which enable goods to travel from seller to buyer. This often involves a journey of several thousand miles, using more than one mode of transport.
There must have been a sale – and contract – agreed between a seller and buyer for the supply of goods before a freight forwarder is needed. Many of the elements of this contract impact directly on the nature and detail of the contract eventually agreed between the forwarder and their client – which could be the seller or buyer of the goods.
Trading conditions
To ensure the client and the forwarder fully understand – and agree upon – their responsibilities in the transportation process, the client must be made aware of the forwarder’s trading conditions. This needs to be done before details of the contract are agreed – ideally at the quotation stage.
Trading conditions establish the circumstances under which any service is provided and usually include limiting the forwarder’s liability in the event of a claim against them. Failure to do this could leave the forwarder with unlimited liability – which could prove very costly.
Trading conditions also:
- ensure the client knows their goods are not automatically insured
- provide safeguards to help ensure the forwarder is paid once the job is done
- protect the forwarder if the client fails to fully disclose the contents of a consignment, eg hazardous material or goods of an exceptionally high value
For information about packing goods and transporting hazardous material, see the guide on Freight forwarding: moving goods.
Credit to : https://www.gov.uk/freight-forwarding-managing-risk